Investors may be looking for active ETFs following active’s big year in 2023, with all kinds of options available. The latest strategy to join the active landscape comes from Avantis Investors.
The firm launched an active emerging markets ETF, the Avantis Emerging Markets ex-China Equity ETF (AVXC) on March 21. The strategy joins the firm’s growing suite of active ETFs and may appeal to investors looking for new strategies. The fund trades on the Nasdaq exchange.
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Its particular appeal owes to its combination of emerging markets and active, while excluding China. Investors may be looking to add some diversification outside of the U.S. While the U.S. stock market is doing pretty well, it has been very reliant on technology.
What’s more, those tech stocks may be pricing in rate cuts that aren’t as set in stone as markets may think. They will come eventually, but their number and timing may be overestimated.
Emerging markets, benefiting from trends in changing global supply chains, for example, diversify the ETF away from U.S. tech. An active strategy, too, adds a needed scrutiny to emerging markets firms. Leaning on experienced managers, an active emerging markets ETF can adapt more quickly to foreign events noticed by its experienced managers in a way that passive, index-following strategies can’t.
Of course, studious readers will recognize that China dominates emerging markets equities. That could pose an issue given how much Chinese equities are disappointing right now. AVXC, of course, excludes China. On top of its active emerging markets ETF approach, that screen could make it a solid satellite addition for portfolios.
AVXC, Avantis’ 28th active ETF launch since 2019, charges a 33 basis point fee. Its approach may appeal to investors looking to diversify and get some performance from abroad, too.
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